Many people think that bankruptcy is immoral. Let's look at the Bible and see how it treats the concept of
bankruptcy.

Leviticus 25:39 makes it clear that people
are generally expected to pay their just debts. However, the
moral and legal obligation to pay debts is balanced by the need
for compassion and the requirement that debts be regularly
canceled, found in Deuteronomy 15:1.

Deuteronomy 15:1 requires that debts must
be discharged on a regular basis: “At the end of every seven
years you shall grant a release. And this is the manner of the
release: every creditor shall release what he has lent to his
neighbor, his brother, because the Lord’s release has been
proclaimed.” Whether the debt was partially paid was not
important, and liability didn't matter at all—this is a
strict requirement without any wiggle room, much like the clear
statement in Deuteronomy 5:17 that "Thou shall not
kill."

The Old Testament required the
cancellation of debt every seven years whether a lender was
happy about it or not—it didn't give a choice, it merely
commanded. Why? To achieve some higher purpose, such as
individual integrity and the preservation of the family unit,
and to limit the power of the wealthy.

The Old Testament is filled with examples
of compassionate treatment of the poor, and with the importance
of preserving the family unit. Deuteronomy 15:7-10 is particularly
forceful, stating, “If there be among you a poor man of one
of thy brethren within any of thy gates in thy land which the
LORD thy God giveth thee, thou shalt not harden thine heart,
nor shut thine hand from thy poor brother:”

The
Bible on Interest

The Biblical use of the term “usury”
corresponds to our modern word “interest,” rather than to
“excessive interest.” Most people today would not seriously
question the morality of profiting from a loan at normal
interest rates, though one commentator in the Talmud argues against the lending of money
with interest.

Exodus 22:25 states, “If thou lend money
to any of my people that is poor by thee, thou shalt not be to
him as an usurer, neither shalt thou lay upon him usury.” Leviticus 25:35 says, “And if thy brother
be waxen poor, and fallen in decay with thee; then thou shalt
relieve him: yea, though he be a stranger, or a sojourner; that
he may live with thee.” Deuteronomy 23:19 says, “Thou shalt not
lend upon usury to thy brother; usury of money, usury of
victuals, usury of any thing that is lent upon usury.”

Psalm 15:5
characterizes a righteous man as one who, among other things,
“lends his money without usury.” Both Ezekiel 22:12
and Nehemiah
5 condemn lending money with interest, especially to the
poor. And Ezekiel 18:13
lists the taking of interest among sins worthy of death.

The prohibition on interest is based on
God’s covenant with Israel and upon the compassionate
treatment of various oppressed groups: resident aliens; widows;
orphans; and the poor. Exodus
22:25-27 states the law in explicit terms: “If you lend
to one of my people among you who is needy, do not be like the
money lender; charge him no interest. If you take your
neighbor’s cloak as a pledge, return it to him by sunset,
because his cloak is the only covering he has for his body.
What else will he sleep on? When he cries out to me, I will
hear, for I am compassionate.” Leviticus
25:35-37 provides that “If one of your countrymen becomes
poor and is unable to support himself among you, help him as
you would an alien or a temporary resident, so that he can
continue to live among you. Do not take interest of any kind
from him, but fear your God, so that your countryman may
continue to live among you. You must not lend him money at
interest or sell him food at profit.” Finally, Deuteronomy
23:19-20 provides: “Do not charge your brother interest,
whether on money or food or anything else that may earn
interest.”

Jesus clearly had these Biblical
principles in mind when he admonished the “money changers”
and removed them from God’s house, the sacred Temple. In John 2:14, Jesus
“poured out the changers of money and overthrew the
tables”. Jesus, in fact, was always true to the principles
underlying the prohibition of usury and believed in debt
forgiveness and the notion of the importance of placing love
and compassion above greed and wealth. In Luke 6:34-35,
Jesus said: “And if you lend to those from whom you hope to
receive, what credit is that to you? Even sinners lend to
sinners, to receive as much again. But love your enemies and,
do good, and lend, expecting nothing in return, and your reward
will be great, and you will be sons of the Most High; for he is
kind to the ungrateful and the selfish.” The followers of
Jesus were to be concerned with the welfare of others, even
when met with hatred and abuse.

The consistent teaching of both the Old
and New Testaments is that compassion, mercy and justice
override purely economic concerns, such as loans. Religious
people are to be gracious to all, even debtors. Jesus said that
God causes the rain to fall on the just and the unjust alike,
and in Mark
10:25 he said that “[i]t is easier for a camel to go
through the eye of a needle, than for a rich man to enter in to
the kingdom of God”. And in Luke 16:9 he said:
“I tell you, use worldly wealth to gain friends for
yourselves, so that when it is gone, you will be welcomed into
eternal dwellings,” and to “forgive and ye shall be
forgiven,” Luke
6:37.

The compassion of the Scriptures,
including the setting aside of legitimate rights of lenders,
was typical of economic relationships in the economy of early
Judeo-Christian societies. The central theme is one of
stability—a stable society with a guarantee of economic
security to each family. Wealth was viewed as a blessing from
God (Deuteronomy
8:11-18, 28). This blessing resulted from obedience and was
based on God’s compassion. Tithing for the poor, the gleaning
laws, the year of the Jubilee, were all tangible ways to show
compassion for each other and honor God by following His law.
Beyond income-maintenance programs, the Biblical Law provided
permanent mechanisms—such as the Sabbatical year and
Jubilee—to ensure that temporary misfortune barred no family
from full participation in economic life.

So the next time someone tells you that
bankruptcy is immoral, pick up a copy of the Bible and tell
them to do some reading because they're flat out wrong!

Based in
part on an article by O. Max Gardner, III, Esq.

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